Wells Fargo Securities LLC on Feb. 25 downgraded Pinnacle West Capital Corp.'s shares to "market perform" from "outperform," based on valuation.

In its downgrade, Wells Fargo noted positive attributes of Pinnacle West, including constructive regulators, good cost controls, investment opportunities and a strong balance sheet. "Our downgrade to Market Perform solely reflects our belief that these virtues are now better appreciated in the share price," Wells Fargo Analyst Sarah Akers wrote.

Additionally, Wells Fargo analysts lowered the price target for Pinnacle West to $85 per share from $98 per share. Shares of Pinnacle West closed the Feb. 23 session at $80.15.

The downgrade followed Pinnacle West's release of fourth-quarter and full-year 2017 results on Feb. 23. The company reported fourth-quarter 2017 net income attributable to shareholders of $21.6 million, or 19 cents per share, down from $53.2 million, or 47 cents per share, in the same quarter of 2016. The result beat the S&P Capital IQ consensus normalized EPS estimate for the most recent quarter of 12 cents.

Wells Fargo increased its 2018 EPS estimate for Pinnacle West to $4.45 from $4.35 per share, and left its 2019 EPS estimate at $4.65.